India Inc’s output expands in September

New Delhi: Manufacturing activity in India expanded in September for the second month in a row, driven up by increase in output and new orders, even as their growth pace remained weak in the context of historical trend, a survey said on Tuesday.

The Nikkei India Manufacturing Purchasing Managers’ Index (PMI) came in at 51.2 in September, little changed from its August reading, pointing to an ongoing recovery in business conditions, following the launch of GST. The figure was below the long-run trend of 54.1.

A reading above 50 denotes expansion and one below this mark means contraction.

“September data painted an encouraging picture as the sector continued to recover from the disruptions caused by the introduction of GST in July,” said Aashna Dodhia, Economist at IHS Markit, and author of the report.

Ms Dodhia further said: “Business confidence strengthened among manufacturers as they reportedly anticipate long-term benefits from recent government policies. This was confirmed as the sector experienced meaningful gains in employment.”

On the back of more new work orders, Indian manufacturers raised their staffing levels at the fastest pace since October 2012. On the prices front, the survey said that though cost pressure intensified during September, inflation remained weaker than the long-run trend.

The strengthening of the rupee may put a squeeze on efforts to revive demand for Indian goods from export markets. Meanwhile, helped by robust performance of coal, natural gas and electricity, the eight core sectors recorded a five-month high growth rate of 4.9 per cent in August, official data showed on Tuesday.

The infrastructure sectors — coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity — had witnessed 3.1 per cent expansion in August last year. The infrastructure growth was 2.6 per cent in the previous month of July. The core sector growth in August is the highest since March, when it grew by 5.2 per cent.

The production of coal, gas and electricity rose by 15.3 per cent, 4.2 per cent and 10.3 per cent, according to the data.